Rise of the institutional family office forces wealth managers to lift their game
Theone Star
Family offices are transforming into global, multi-generational investment powerhouses, and wealth managers must evolve just as quickly if they want to stay relevant, Theone Star, head of private wealth at Schroders Australia, says.
“Family offices globally, including in Australia, are morphing from relatively straightforward structures for preserving wealth to sophisticated institutions managing complex portfolios across asset classes and jurisdictions,” Ms Star says.
The scale of change has been made clear in Schroders’ latest Global Investor Insights Survey, which found that 77 per cent of family offices invest in private markets, well above the 70 per cent rate among other institutional investors, and a third allocate 20 per cent of their portfolios to private assets.
Ms Star said this growing sophistication is reshaping expectations of wealth managers as families now demand access to the full spectrum of investment opportunities and the same institutional-grade infrastructure available to pension and sovereign funds.
“It’s clear that the needs of today’s family offices go far beyond traditional investment management,” Ms Star says.
“They expect exposure to both public and private markets, technology and reporting systems, and the personal touch of a trusted partner who understands generational wealth.”
Families are increasingly seeking guidance on succession planning, philanthropy, and education for younger heirs, with seven in ten family-office professionals globally expecting charitable giving to increase by 15 per cent or more in the next two years.
“Families increasingly define success not just by returns, but by the impact they leave,” Ms Star says.
“Unlike much of the finance industry, family offices think in decades, not quarters. They want partners who can deliver continuity across generations and avoid the “key-person risk” that can upend smaller operations.
“They are looking for advisers who can translate those ambitions into sustainable investment strategies and governance frameworks that endure.”
Technology and risk management have also been identified as key areas for family offices, with recent research from Deloitte showing 43 per cent of family offices globally suffered a cyberattack in the past two years, and a quarter hit three or more times.
“The wealth of these families makes them attractive targets, and investment managers need to invest heavily in cybersecurity, systems resilience and staff training, and not just focus on portfolio performance,” Ms Star says.
Wealth managers that combine institutional expertise with relationship-driven service will set the standard for the next era of private wealth.
“Family offices think in generations. The future belongs to wealth managers who share that horizon.”
